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Buying a Vehicle Takes Twice as Long as Consumers Think It Should

WESTLAKE VILLAGE, Calif.: 28 July 2015 — A majority of new-vehicle buyers in the United States indicate that it should take no more than two hours to complete a vehicle purchase from the time they walk into the dealer showroom[1]; however, industry data finds the median amount of time actually spent completing a new-vehicle purchase is four hours,[2] according to the June 2015 PowerRater Consumer Pulse.

PowerRater Consumer Pulse is a monthly analysis developed jointly by J.D. Power and DealerRater. An alliance between J.D. Power and DealerRater integrates each company’s capabilities to gather comprehensive vehicle shopper feedback based on J.D. Power’s customer satisfaction research and DealerRater’s customer ratings and reviews of car dealerships.

Key Findings

More than two-thirds (67%) of luxury and 62 percent of mass market buyers indicate it should take no more than two hours to complete a vehicle purchase from the time they enter the showroom. Half of buyers from each segment indicate the ideal duration is somewhere between one and two hours.

Slightly more luxury vehicle buyers than mass market vehicle buyers prefer to spend less than an hour in the dealership (18% vs. 13%, respectively).

According to the J.D. Power 2014 U.S. Sales Satisfaction Index (SSI) StudySM, buyers who use the Internet to shop for their new vehicle prior to visiting the dealership spend more time overall completing their purchase than those who do not research online. In addition, buyers that used the internet are more than twice as likely to have compared prices from different dealers, and are more likely to know the expected price before they visit the dealer, than those that didn’t.

“Many retailers are expending enormous amounts of energy and capital to achieve a one-hour transaction time frame for their sales process. While this quest is noble―and customers do want to spend less time than they are currently―buyers tell us that one to two hours is a very reasonable time window,” said Gary Tucker, chief executive officer of DealerRater.

According to the J.D. Power 2014 SSI Study, most of a vehicle buyer’s in-dealership experience is currently spent on selecting a vehicle for purchase and negotiating the deal (60 minutes each, on average). This is followed by an average of 30 minutes to discuss and sign the necessary paperwork and an additional 30 minutes to take delivery of the vehicle. This leaves the remainder of the overall time spent waiting both

before and after the paperwork process, a key area to focus on in terms of creating a more seamless and efficient process flow.

“From a generational standpoint,[3] Gen Y buyers spend more time negotiating than other generational groups , as they are more likely than the other generations to conduct research online prior to purchase and to have concerns regarding affordability, which emphasizes the importance of the negotiation phase for Gen Y,” said Chris Sutton, vice president, U.S. automotive retail practice at J.D. Power. “Both Gen Y and Gen X buyers spend less time taking delivery, likely because they need less instruction on the features and functionality of their new vehicles.”

According to Sutton, “It’s important for dealers to be efficient with customers’ time. Customers will value specific parts of the process, such as finding the right vehicle, understanding features and controls and understanding how much and for what they’re paying. The dealer needs to strike an effective balance between educating the customer and efficiency.”

The 2014 SSI Study data finds that time spent in the dealership has a significant impact on overall customer satisfaction. While satisfaction among new-vehicle buyers who spend less than two hours in the dealership averages 861 on a 1,000-point scale, satisfaction declines to 844 among those who spend between two and three hours in-dealership and drops to 807 among those spending four to five hours to complete the purchase process.

Where Improvements Can Be Made

To improve customer satisfaction with the buying process, dealers should develop more efficient processes during the different phases of the buying process (vehicle selection, negotiation, paperwork and vehicle delivery). Reducing the amount of time a customer has to wait when purchasing a new vehicle is a key opportunity for dealers.